Steel Division

This report is a translation of the original report in German, which is solely valid.

Market environment and business development

For the Steel Division, the spread of the COVID-19 pandemic in Europe and the resulting lockdowns triggered meltdowns in almost all of its customer segments at the start of the business year 2020/21. The division responded immediately to the new conditions. A marketing campaign involving all segments enabled it not only to acquire significant orders but also to exploit the rebound in demand after the Northern summer as best as possible.

The consumer goods and white goods industries did well even during the difficult first business quarter, with demand returning to a good level right after the end of the first lockdown. Likewise, the construction industry, which had to contend with construction site closures during the lockdowns, rapidly returned to the solid position it had occupied prior to the spread of COVID-19. It did not weaken again until the third quarter of the current business year for seasonal reasons.

The automotive industry in Europe had to shut down most production in April 2020, gradually starting it up again in May and June. This led to an initially slow rebound that gathered speed over the Northern summer. As the business year wore on, orders in the automotive segment once again returned to levels largely commensurate with those prevailing prior to the outbreak of the COVID-19 pandemic. So far, this segment’s rapid and strong recovery has held up although the supply chains that were depleted in connection with the sharp inventory reductions during the shutdowns over the Northern summer have by now been replenished.

Aside from the strong economic downturn in Europe, the mechanical engineering industry was hammered also by the limitations on travel to its traditional export markets and a dramatic decline in demand during the business year’s first half. This customer segment, too, did not see order levels recover until the third business quarter.

The energy industry (a key market of the heavy plate product segment) came under extreme pressure on the whole. Besides the weakening of demand on account of COVID-19, this was due primarily to the overproduction of both crude oil and natural gas—a situation that has barely improved over the course of the business year 2020/21. While the heavy plate segment can escape this development only in part in this market environment, it can offset the downturn to some extent by focusing on special applications.

Owing to the sharp decline in orders, production capacities at the plant in Linz, Austria, had to be adjusted in the first few months of the business year 2020/21, and a small blast furnace was shut down completely for a while. It was fully started up again in September 2020 thanks to the division’s focused working of the market and flexible approaches to production.

Prices for iron ore continued to rise during the reporting period despite the deep, global market distortions arising from the COVID-19 pandemic. This is rooted in China’s development into the world’s biggest steel producer. China succeeded in containing the pandemic within a fairly short time and drove the country’s production of crude steel to new highs through state-sponsored investment projects. The prices of the other input materials required for the production of steel—especially coal, scrap, and energy—initially dropped in response to the production curtailments outside of China. Toward the end of the reporting period, however, the cost of scrap and iron ore, in particular, rose substantially due to the renewed expansion of steel production capacities in Europe and North America.

Steel prices in the European spot market fell at the start of the current business year on account of shrinking demand. After stabilizing over the Northern summer, they rose again quickly and significantly in the third business quarter thanks to the unexpectedly rapid rebound of demand for steel despite the staggered build-up of steel production capacities along with rising raw materials prices.

At the start of the business year 2020/21, the Steel Division had to contend with price declines in its short and medium-term business also. Thanks to the contracts’ structure, however, these were not as dramatic as those in the spot markets. On the whole, it is the structure of these contracts that also caused the price increases in the reporting period’s second half to take hold only after a minor delay.

Given the steel production cutbacks in both North America and Europe, the Group’s direct reduction plant in Texas, USA, was confronted with significantly dampened demand during most of the business year’s first half. The company’s success in acquiring new customers in the Far East succeeded in offsetting this market weakness only in part. Thanks to stronger demand for steel in North America and the associated increase in the prices for steel scrap, the market environment improved considerably toward the end of the reporting period.

Financial key performance indicators

Quarterly development of the Steel Division

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Q 1 – Q 3





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Q 2


Q 3






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Employees (full- time equivalent), end of period













The performance of the Steel Division in the first three quarters of the business year 2020/21 was determined, externally, by the ramifications of the COVID-19 crisis and, internally, by consistent cost management. Particularly in the first business quarter, it was characterized to a large extent by the meltdown in demand. A steady upward trend made itself felt in the subsequent quarters, as manifested in continually growing production and delivery volumes. The division’s key performance indicators for the third business quarter which, in the final analysis, ended up surpassing those of the same quarter the previous year, also reflect this positive trend.

On the whole, the revenue of the Steel Division fell by 13.5% in the first three quarters of the business year 2020/21 to EUR 2,956.4 million (Q 1 – Q 3 2019/20: EUR 3,419.1 million). While deliveries of flat steel products decreased by about 5% during the reporting period, the division’s prices dropped whereas raw materials prices remained high. The implementation of far-reaching cost measures as well as the additional use of state-sponsored short time work programs made it possible to adjust structural costs to lower demand. Challenging market conditions also caused the operating performance of the direct reduction plant in Texas, USA, to flatten dramatically year over year. The decline in the division’s EBITDA, however, remained modest despite the difficult environment. As a result, EBITDA for the first three quarters of the business year 2020/21 fell year over year by 18.0% to currently EUR 293.0 million (Q 1 – Q 3 2019/20: EUR 357.1 million). At 9.9%, the EBITDA margin remained relatively stable (previous year: 10.4%) thanks mainly to the division’s consistent cost management. At EUR –119.6 million (margin of –4.0%), the division’s EBIT for the business year’s first three quarters was as much in negative territory as it was in the same period the previous year (EUR –112.1 million, margin of –3.3%); note, however, that both earnings figures contain significant non-recurring effects. A total of about EUR 200 million in impairment losses had to be taken on assets of the direct reduction plant in Texas, USA, as well as the Foundry Group (cast steel) in the previous year. In the current business year, EBIT was negatively impacted by about EUR 170 million in impairment losses at the Texas direct reduction facility.

The quarter-on-quarter (QoQ) comparison of the second and third quarters of the business year 2020/21 shows that the sharply rising momentum behind demand is steadily boosting revenue. Revenue rose by 13.1%, from EUR 995.6 million to EUR 1,125.9 million. The extraordinary increase in sales of flat steel products by 10% was key to this positive outcome. Due to the structure of its customer contracts, however, in the third business quarter the Steel Division benefited only in part from significantly higher spot market prices after the Northern summer. Given rising raw material costs, in the final analysis the gross margin decreased slightly from the second to the third quarter. The operating result of the Texas reduction plant still falls short of expectations despite the revenue gains in the third quarter of the business year 2020/21. On the whole, however, the Steel Division’s EBITDA for the third business quarter improved by 40.7% to EUR 131.4 million with a margin of 11.7% (Q 2 2020/21: EUR 93.4 million, margin of 9.4%) because both production and delivery volumes in the flat steel segment have returned to high levels. EBIT—which had been substantially negative in the preceding quarter due to the aforementioned non-recurring effects (EUR –155.2 million, margin of –15.6%)—rose to EUR 49.1 million (margin of 4.4%) in the third business quarter.

About voestalpine

In its business segments, voestalpine is a globally leading steel and technology group with a unique combination of materials and processing expertise. voestalpine, which operates globally, has around 500 Group companies and locations in more than 50 countries on all five continents. It has been listed on the Vienna Stock Exchange since 1995. With its top-quality products and system solutions, it is a leading partner to the automotive and consumer goods industries as well as the aerospace and oil & gas industries, and is also the world market leader in railway systems, tool steel, and special sections. voestalpine is fully committed to the global climate goals and is working intensively to develop technologies which will allow it to decarbonize and reduce its CO2 emissions over the long term. In the business year 2019/20, the Group generated revenue of EUR 12.7 billion, with an operating result (EBITDA) of EUR 1.2 billion; it had about 49,000 employees worldwide.


50 Countries on all 5 continents
500 Group companies and locations
49,000 Employees worldwide

Earnings FY 2019/20

€ 12.7 Billion


€ 1.2 Billion


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